Buy policies on phone now

Buy policies on phone now

A life insurance policy can now be bought over the phone without physically filling an application form.

What is proposed…
Effective October 1, people will be able to purchase life insurance policies over telephone without filling any form or signing any document. According to the latest Insurance Regulatory and Development Authority, or IRDA, guidelines on telemarketing: "In instances where a policy is issued without obtaining a proposal in physical form, insurers shall forward a verbal transcript of the voice/electronic record of the queries raised and answers thereto on the basis of which the policy has been underwritten, along with the policy bond."

The guidelines call for "standardised scripts for presentation of benefits, features and disclosures under each of the products proposed to be sold" by insurers/brokers prior to a sale. The record of every call and SMS leading to a policy sale will be required to be transferred to the insurer within 30 days.

… and the reasons…

One can already purchase travel and health insurance over phone without having to fill a form. The process is now being extended to life insurance policies. The guidelines for telemarketing of insurance products are based on the recommendations of a committee constituted by IRDA on distribution channels, which called for permitting direct marketing of all insurance products and developing this as one more channel for reaching out to the mass market with simple products requiring limited or no advisory.

… and its impact
"This is a path-breaking change and makes sale of life insurance products easier," says Girish Batra, Chairman and Managing Director, NetAmbit, a telemarketing company that sells financial products. The new guidelines also put a cap on sale of complex products like unit-linked insurance plans, or ULIPs, through telephone, limiting the annual premium to Rs 50,000 in case of non-single policies and to Rs 100,000 for single premium policies. ULIPs account for over 55 per cent of the total life insurance premium collection, as per data from the Life Insurance Council, a body of life insurers. However, Mayank Bathwal, CFO of Birla Sun Life Insurance, says the cap on ULIPs will not impact sales, as the average ticket size of a life insurance policy is Rs 20,000 a year.

The regulator has also banned sale of universal life plans, which like ULIPs combine investment and insurance but are more complex and riskier products than ULIPs, through telemarketers.

Courtesy: Money Today